HQ 953939: Protest and Application for Further Review 1001-91-000775; meaning of phrase "not intended to be applied retroactively" in modification and/or revocation rulings

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                           HQ 953939 

                         August 11, 1993

CLA-2 CO:R:C:T 953939 CMR

CATEGORY: Classification

Area Director, J.F.K. Airport
U.S. Customs Service
Building 178
Jamaica, New York  11430

RE: Protest and Application for Further Review 1001-91-000775;
    meaning of phrase "not intended to be applied retroactively"
    in modification and/or revocation rulings 

Dear Sir:

     This ruling is in response to protest 1001-91-000775 filed by
the firm of Grunfeld, Desiderio, Lebowitz & Silverman, on behalf
of their client, Katony Corporation, seeking application of HRL
087855 of November 30, 1990, to the entries at issue regarding
their classification.  

FACTS:

     HRL 087855 of November 30, 1990 modified NYRL 853764 of July
1990.  The merchandise at issue therein was style 59621, a women's
100 percent polyester knit blouse with extremely small mylar type
circles applied to the outer surface at very close intervals
creating a lame effect.

     Style 59621 and style 72621, a women's blouse made of the same
type fabric, are the garments at issue in this protest.

ISSUE:

     Does the language contained in HRL 087855 and 19 CFR
177.9(d)(2) regarding the retroactive application of a ruling
letter which acts to modify or revoke an earlier ruling, preclude
application of that modification or revocation ruling to past
transactions which have not yet become final when such application
is to the benefit of the importer?
                               -2-


LAW AND ANALYSIS:

     You have taken the position that due to the language in 19
CFR 177.9(d)(2) that "The modification or revocation of a ruling
letter will not be applied retroactively * * *."  Additionally,
this language is repeated in HRL 087855 in the statement: "This
modification is not to be applied retroactively to . . . and will
not, therefore, affect the transaction for the importation of your
merchandise under that ruling."  

     This office understands the hesitancy of your port to follow
HRL 087855 in this situation in part due to language in the ruling
stating it is not to be applied retroactively and therefore will
not affect past transactions for the importation of the merchandise
at issue therein and in part due to the language of 19 CFR
177.9(d)(2).  

     The language of 19 CFR 177.9(d)(2), should be read in
conjunction with paragraph (v) which provides that there will be
no retroactive application of a modification or revocation
provided: 

     All of the parties involved in the transaction acted in good
     faith in reliance upon the ruling and retroactive modification
     or revocation would be to their detriment.

     The language regarding the retroactive application of a ruling
which has appeared in numerous Headquarter's modification and
revocation rulings was never intended to prevent Customs from
following the determination in a ruling in open matters such as
unliquidated entries or other transactions which have not yet
become final.  The language is merely intended to alert the
recipient of the ruling that Customs will not penalize him or her
for following the ruling previously issued by Customs and now being
revoked or modified.  Due to the confusion caused by the wording
regarding retroactivity, a change in that wording will be made to
prevent further misunderstandings.

     HRL 087855 should be applied in determining the proper
classification of the goods at issue.  Protest 1001-91-000775
should be granted.  A copy of this decision is to be attached to
the CF 19 which is returned to protestant.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division